BUDGET
The budget will be the main focus this session. Minnesota's latest economic forecast projected a $1.1 billion deficit for the next two-year budget cycle. Gov. Mark Dayton will use that analysis of projected tax revenues and spending obligations to shape a budget proposal that he must deliver by Jan. 22. He's argued for ending the "budget roller coaster" that the state has been on for the past 12 years, but he hasn't said yet exactly how he intends to do it. After Dayton releases his plan the DFL-controlled Legislature will spend the next several months debating it and adding ideas of its own. The House, the Senate and the governor will have to agree on a plan and pass it by late May. Spending reductions and tax increases will again be part of the discussion.

TAXES
Gov. Dayton has said he wants to make the state tax system fairer and simpler, and he is expected to unveil a tax reform plan this month. Dayton still supports an income tax increase on the wealthiest 2 percent of Minnesotans. He also appears to have some interest in expanding the sales tax base, while lowering the rate. That could mean new taxes on business to business services, and other services. Some have suggested taxing clothing sales. Democrats campaigned on the need to lower property taxes. Some business groups continue to push for collecting sales taxes on some online transactions.

HEALTH CARE
Minnesota is moving ahead with plans for a new health insurance exchange, which is required by President Obama's Affordable Care Act. State exchanges will allow consumers to comparison shop for health insurance in online marketplaces. Federal officials notified the state last month that it had conditional approval to operate its exchange in 2014. Democrats, including Dayton, will have to find revenue to pay for the exchange while balancing the concerns of business leaders worried about costs and consumer advocates worried about access. Expect Republicans to oppose whatever plan moves forward since they have been universally opposed to the Affordable Care Act on both the state and federal level.

Two former leading legislators who helped hammer out budgets in tough political atmospheres join The Daily Circuit Tuesday, Jan. 8, 2013: Duane Benson, former Senate Minority Leader, and Margaret Anderson Kelliher, former Speaker of the House.
There will be additional discussions about the new legislative session this week. Wednesday will feature a discussion about the pressure to raise money for transportation projects and on Friday, The Daily Circuit will be broadcasting two live hours from the State Capitol.